Victoria has initiated a significant transformation in its housing policies, aiming to help millennials secure home ownership. Over the past two years, the state government has implemented a series of ambitious reforms, surprising even advocates of these changes. According to Brendan Coates, the director of the Grattan Institute’s housing and economic security program, “We’ve seen, in many respects, a planning policy revolution in Victoria.”
Historically, the housing discourse in Victoria has been shaped by “nimbys” (not in my back yard) – residents resisting new developments in their neighborhoods. Recently, however, a shift has occurred, largely propelled by the Labor government aiming to attract younger voters and the emergence of the “yimby” (yes in my back yard) movement.
Yimby Melbourne, established in February 2023, resulted from extensive online discussions among individuals frustrated by the lack of affordable housing. Jonathan O’Brien, the group’s lead organiser, emphasizes that their initial focus was on grassroots activism. “We assumed it would be a grassroots movement,” he states. “But we have had a state government so willing to listen to the evidence that we were able to make a lot more meaningful systemic change in two years than any other reform group.”
Significant strides
The group’s first major initiative came in April 2024 with a report advocating for enforceable housing targets for local government areas (LGAs). This was quickly followed by the state government announcing its own LGA targets. By July, Premier Jacinta Allan and Planning Minister Sonya Kilkenny revealed plans to rezone land around 50 train and tram stations, a move met with resistance from some residents.
The government’s reforms extend beyond zoning; it has introduced a fast-tracked townhouse code, simplified the subdivision process for homeowners, eliminated car-parking requirements for new developments, and revamped the state’s infrastructure contribution scheme to ensure developers contribute to essential services like schools and parks.
Last month, parliament approved a significant overhaul of the Planning Act, reducing approval times to as little as 10 days and limiting appeal rights primarily to neighboring properties. The government’s media release announcing these changes highlighted its commitment to a planning system that embraces the yimby ethos, stating: “A Planning System That Says Yes In My Backyard – Literally.”
Coates notes that Victoria’s reforms are notably more ambitious than those implemented in New South Wales during the same timeframe. A recent Grattan Institute report indicated that changes to the townhouse code and the establishment of 60 activity zones could boost housing capacity in Melbourne by approximately 1 million and 600,000 homes, respectively, equating to about 70% of the city’s existing housing stock.
In contrast, reforms in New South Wales could result in up to 930,000 new homes in Sydney, representing just 40% of its current stock. The townhouse code facilitates a streamlined planning process for duplexes and low-rise apartments up to three stories, provided they meet specified criteria. Coates argues that if Sydney adopted a similar code, it could create capacity for over 1 million commercially viable new homes.
Concerns and protests
Despite these advancements, not all stakeholders endorse the government’s approach. Protests have erupted in affluent areas such as Brighton, where new regulations permit the construction of apartments up to 12 stories high. In Elsternwick, a rally against proposed housing towers faced disruption from yimby supporters brandishing signs that read, “Let others live here too.”
Kat Smith, a senior policy officer at Planning Institute Australia (PIA), commends the government’s innovative strategies but criticizes the limited engagement with the planning profession, particularly those in local councils tasked with implementing the new regulations. She argues that the reforms lack a coherent framework, stating, “Even though some elements have merit on their own, it is not clear how the various reforms fit together to deliver more housing.”
The PIA has raised alarms about the broad rezoning around transport hubs, arguing it overlooks local context and diminishes councils’ ability to assess environmental risks and infrastructure needs when evaluating planning permits. Smith highlights that longstanding landscaping and sustainability requirements established by local councils have effectively been disregarded.
Rising construction costs
Coates warns that Melbourne’s successes might paradoxically hinder future development. As housing stock increases, prices have dropped below those in many other capital cities, complicating the financial viability of new projects. This situation is exacerbated by escalating construction costs, partly stemming from the state government’s own infrastructure initiatives, which have strained the availability of building materials and labor.
“If the Victorian government had enacted these reforms during its previous term, much of the additional capacity would have been profitable to build,” Coates notes. He points out that while property taxes in Victoria are only marginally higher than in other states, the foreign purchaser additional duty, which imposes an extra 8% in stamp duty for international buyers, may deter foreign investment critical for stimulating new housing projects.
The Victorian government maintains that first-time homebuyers should not compete directly with foreign investors. Looking ahead, both Coates and O’Brien agree that the next essential reform must focus on heritage protection. Currently, 29% of residential land within 10 km of the Central Business District is subject to heritage overlays, limiting development opportunities.
“Enormous amounts of Melbourne are locked up under heritage – typically affecting old, mouldy homes that are share houses,” O’Brien points out. He advocates for repurposing these low-quality dwellings to better serve the community’s needs.
As Victoria navigates this housing revolution, the balance between development and community interests remains a complex and contentious issue.
